Dannemora Mineral AB: Press Release 10 December 2009
SECTOR-LEADING CONSULTING COMPANY
CONFIRMS DANNEMORA MINE POTENTIAL
- The technical, environmental, legal and financial due diligence processes for the Dannemora iron ore project have now been completed. The process was carried out by Micon Ltd, one of the mining industry's most renowned and respected consulting companies. The results largely confirm the conclusions from the previous feasibility study, and mean that the current project plan for the Dannemora mine is considered viable from a technical, environmental and legal perspective and that the project rests on a sound financial base and has the potential to generate an attractive return on invested capital.
- The plans for the mining project in Dannemora have been gradually refined and certain key figures have therefore been changed. Total investments are now expected to be SEK 832 million (previously 838 million). Production costs now include lease costs for mobile machinery, which was not previously the case, and are expected to be SEK 193 per tonne of finished product (previously 179).
- The mine project's discounted cash flow (net present value, NPV) is estimated at around SEK 2 billion, based on the updated investment and operating expenses and new forecasts regarding iron ore prices and the dollar rate.
- Dannemora Mineral is working on a number of initiatives aimed at improving the mine project's NPV. There is thought to be good potential for increasing the iron ore reserves considerably, which would add many years to the life of the mine. Annual production is also likely to be higher than expected as the iron ore processing plant is projected for an annual capacity of 2 million tonnes, while the NPV is cautiously based on annual production of 1.5 million tonnes.
- The market and prices experienced favourable development during autumn, with demand for iron ore continuing to soar in China. Capacity utilisation in the global steel industry has risen sharply since the beginning of 2009 and the World Steel Association (WSA) estimates that total world steel production will increase by 9.2% in 2010 which will put it back at the same level as in 2008. The spot price for iron ore delivered to China is just over 30% above the year's contracted benchmark prices and indicates an increase in the benchmark prices for 2010.
The press release (including tables) can be downloaded from the following link: